Help me with the basics plzSupport

OK here's an easy question for you but it will help me a lot. I recently found out that my magic has htc hero rom. What is finally the firmware? The version of this rom? I am curious because from the official site HTC Magic - ROM Upgrade with HTC Sense for HTC Magic they say they have an upgrade (which i already have). So I was wondering what is the difference between firmware and this upgrade. If i upgrade to 1.6, will i have still hero rom and this 3.05.401.3 upgrade? And why should i upgrade anyway to 1.6 or 2.0? God i am such a noob i know. I ve searched the forum but it seems that noone is so noob and it seems they know these basics. So plz help me and I will help the others..
Thank you in advance guyz..